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Determinants of Private Investment in Zimbabwe

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  • Jenkins, Carolyn

Abstract

The received wisdom about investment in Zimbabwe is that foreign exchange shortages were the key constraint on private capital formation, and that uncertainty about political developments, price controls and government policy with respect to labor have also discouraged investment. A model of private investment is constructed for Zimbabwe, using a two-step Engle-Granger approach to deal with non-stationary variables. It is found that, in the long run, investment is constrained by the availability of finance, especially retained profits, and that it has been deterred by the external debt-to-GDP ratio. Controls, including foreign exchange allocations, have affected the timing of capital expenditures rather than the desired stock of capital. Copyright 1998 by Oxford University Press.

Suggested Citation

  • Jenkins, Carolyn, 1998. "Determinants of Private Investment in Zimbabwe," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 7(1), pages 34-61, March.
  • Handle: RePEc:oup:jafrec:v:7:y:1998:i:1:p:34-61
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    Cited by:

    1. Muyambiri, Brian & Chiwira, Oscar & Enowbi Batuo, Michael & Chiranga, Ngonidzashe, 2010. "The Causal Relationship between Private and Public Investment in Zimbabwe," MPRA Paper 26671, University Library of Munich, Germany.
    2. Recanatini, Francesca & Wallsten, Scott J. & Lixin Colin Xu, 2000. "Surveying surveys and questioning questions - learning from World Bank experience," Policy Research Working Paper Series 2307, The World Bank.
    3. Twine, Edgar E. & Kiiza, Barnabas & Bashaasha, Bernard, 2015. "The Flexible Accelerator Model of Investment: An Application to Ugandan Tea- Processing Firms," African Journal of Agricultural and Resource Economics, African Association of Agricultural Economists, vol. 10(1), March.
    4. Sunday Aninpah Khan, 2006. "La volatilité de l'aide, les recettes d'exportation et l'investissement privé domestique en zone CEMAC," Brussels Economic Review, ULB -- Universite Libre de Bruxelles, vol. 49(3), pages 245-263.
    5. Babajide Fowowe, 2011. "Financial Sector Reforms And Private Investment In Sub-Saharan African Countries," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 36(3), pages 79-97, September.
    6. Shiferaw, A., 2002. "Private investment and public policy in sub-Saharan Africa," ISS Working Papers - General Series 19100, International Institute of Social Studies of Erasmus University Rotterdam (ISS), The Hague.
    7. repec:rss:jnljfe:v3i1p3 is not listed on IDEAS
    8. Ndikumana, Leonce, 2000. "Financial Determinants of Domestic Investment in Sub-Saharan Africa: Evidence from Panel Data," World Development, Elsevier, vol. 28(2), pages 381-400, February.
    9. Mehlum, Halvor, 2002. "Zimbabwe: Investments, credibility and the dynamics following trade liberalization: on the investment response during trade reform," Economic Modelling, Elsevier, vol. 19(4), pages 565-584, August.
    10. Maame Esi Eshun & George Adu & Emmanuel Buabeng, 2014. "The Financial Determinants of Private Investment in Ghana," International Journal of Financial Economics, Research Academy of Social Sciences, vol. 3(1), pages 25-40.

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